- Housing starts sparked in March for both single-family and multifamily construction
- Building permits also increased in March
Single-Family Starts Increased +15.3% in March
A newly released report from the US Census Bureau indicated that single-family housing starts in March rose +15.3%. The pace of this March increase translates into a pace of 1.24M annualized housing units.
According to Doug Duncan, chief economist with Fannie Mae, “The March pace was the second strongest since 2006, surpassed only by this past December’s reading. An extremely tight supply of existing homes for sale combined with still-favorable mortgage rates and an improving labor market will continue to support demand for new housing. Suburban multifamily housing construction is also benefitting from this trend.”
Number of Building Permits Also Increased in March
Homebuilders filed +4.6% more building permits in the month of March than they did in February. This increase bodes well for future construction.
First American Deputy Chief Economist Odeta Kushi said, “Builders are facing surging demand in an environment of limited existing homes available for sale…(as) there continues to be a demographic-fueled shift away from renting to home-owning driven by Millennials aging into homeownership…”
Housing Starts and Completions Increased in March
According to the National Association of REALTORS® (NAR), privately owned housing starts increased +19.4% in March. Additionally single-family housing completions increased +5.3% compared to the month of February.
NAR’s chief economist Lawrence Yun cheered this news. Yun said, “In nearly every market, +20% more inventory means +20% more home sales. Today’s news on the new home construction surge is, therefore, highly welcomed, especially in light of major challenges on material costs and soaring lumber prices.”
Challenges Facing Builders and Buyer
If it isn’t one thing, it’s another regarding new home construction for both builders and buyers alike.
Supply chain disruptions stemming from pandemic-reduced production, limited building materials, soaring lumber costs, a severe lack of buildable lots, costly building regulations and a shortage of qualified labor have and continue to dampen the pace of new construction.
All of these challenges, according to a recent industry report, are adding approximately $24,000 to the cost of new home construction. That extra $24,000 (a conservative estimate, in my opinion) is causing some potential buyers to opt instead for renovating an existing property…if they can find one.
Thanks to US Census Bureau, First American, Fannie Mae, the National Association of REALTORS® and HousingWire.
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